Dividend

A dividend is a distribution of company earnings to the people who own sharesTermStock×السهمA share of ownership in a company, bought and sold on a stock exchange, that may pay dividends and rise or fall in value.Open the term in it. When a company decides it has made more profit than it needs to reinvest in the business, it can return some of that money to shareholders. Dividends are typically paid in cash, though some companies issue them as additional shares instead. The amount per share is set by the company's board and announced in advance.

Dividends are one of two ways a shareholder makes money from owning a stock. The other is a rise in the share price itself. A dividend gives you cash or shares while you hold the investment, rather than only when you sell it. This matters because it means you can receive a return even if the share price stays flat or falls. For someone building wealth over decades, dividends compound: you reinvest them to buy more shares, which then generate their own dividends. The trade-off is that not all companies pay them. Growth companies often reinvest all profits back into the business rather than distributing them, betting that the share price will rise faster than a dividend would return. A company that pays dividends is signaling it believes its business is mature enough to generate cash it does not need to spend.

• Dividend yield is the annual dividend per share divided by the share price, expressed as a percentage. A high yield can signal either a generous payout or a falling share price.
• Dividends are taxed as income in most jurisdictions, and the tax treatment varies by country and by whether the dividend is paid in cash or reinvested.
• A company can cut or suspend its dividend if profits fall or if it needs cash for other purposes. Dividend history is not a guarantee.
• Dividend-paying stocks tend to be in mature industries like utilities, banks and consumer goods rather than in technology or startupsTermStartup×شركة ناشئةAn early-stage company built to solve a problem or meet a need, typically funded by investors and designed to grow rapidly.Open the term, which typically reinvest all earnings.